Economic Downturn Corks Wine Popularity

Koreans love wine. Not just ordinary or cheap wine BUT EXPENSIVE WINE. But now, bottles of fine "vino" are being marked down on everything-must-go sales.

Why?

The economic downturn is the main reason. Sales are declining because people tend to turn to more economic choices.

Shinsegae, Lotte and Hyundai, the country's top three department stores that each run a sizeable wine shop, said that wine sales from January to March have sunk about 5 percent on-year.

This is a sharp turnaround compared to the solid two-digit growth the largely imported products have been showing over the past three years.

Moon Jae-yong, manager of the wine shop at Lotte Depaartment Store, explained that the weak Korean won has driven up prices by almost 25 percent this year alone, pushing away even consumers who've enjoyed the less-expensive selections.

And the ongoing sales decline is piling up inventory ― so much that retailers are offering discounts of up to 90 percent.

Lotte recently introduced 600 different types of wines from around the world at prices 35 to 80 percent cheaper than usual. Even the most high-end labels from France were marked down by 50 percent.

Lotte's competitors Shinsegae and Hyundai seem to have deployed the same trick, as they too slashed prices dramatically.

But despite the blowout bargains, consumers don't seem to be excited about popping the cork.

Such consumer patterns of avoiding wine bars have led dozens of once popular wine bars to go out of business in downtown Seoul districts.

Hypermarkets Out, Mom and Pops In

Are the once-almighty hypermarkets starting to fizzle out?


Sales at the country's major discount outlets sunk last month by more than 20 percent on-year, according to a government report, Tuesday, and industry forecasts show that the local hypermart business will see slower growth this year due to market saturation and dampened consumer sentiment.


Cushman & Wakefield, a global commercial property brokerage, said in its recent report that consumers are starting to purchase basic necessities such as food in small amounts at neighborhood markets instead of big stores.


``Shoppers are noticing that frequenting the large have-it-all outlets often leads to unnecessary, impulse purchases,'' said Kristin Kim, manager of retail services at C&W. ``More money-conscious people are looking for closer and quicker shopping.''


So what's next for mammoth retailers like Shinsegae E-Mart, Lotte Mart and Homeplus? A cozier consumer approach, apparently.


These giant operators that have so far been running stores that are two to three times the size of a soccer field are turning their eyes to smaller and more neighborly grocery stores to attract consumers who prefer hassle-free shopping.


Dubbed ``super super market'' (SSM), the mom-and-pop-like outlets have slowly been showing up across the country. Homeplus currently runs 107 express shops, while Lotte Mart and GS Retail operate 108 and 107 nationwide, respectively.


A mom and pop store is defined as a small business that is independently owned and operated, with a small number of employees and relatively low volume of sales.


The early starters have demonstrated that the scaled-down stores may be a good way out of the slump, as Homeplus and Lotte Mart reaped sales worth 400 billion won and 850 billion won each last year from their new businesses.


However, the alliance of mom-and-pop stores isn't happy with mega-retailer intrusion.


``They killed us once already with their huge outlets, but they want to do it again,'' said Kim Kyung-bae, the head of the Korea Supermarket Alliance (KOSA), who stressed that independent stores owners are going to vanish within the next three years if giant retailers bulldoze their way in.


``They're not melting into the community as they put it nicely,'' he said. ``They're stealing other people's livelihoods.''

Whitening products target consumers

Kim Ji-sun, 26, an office worker, rearranged her dressing table for the coming spring over the weekend.

Putting aside the rich winter moisturizers, she replaced them with whitening skincare products and a sunscreen SPF 50/PA+++.

"Spring is the season for brighter skin and make-up. I think it`s about time that I start preparing for the upcoming season," said Kim.

Because of the ultraviolet rays that start to get stronger in spring, makeup experts advise people to start protecting their skin starting now.

For beauty-conscious Korean women, skin whitening is serious business. The fad is easily noticed when taking a look at the first floors of major department stores where most cosmetics shops are located. Both local and foreign cosmetic makers are promoting whitening skincare lines exclusively for the Asian market and it is easy to spot women shopping for such products.

Fair skin has long been considered one of the most admired beauty features among Asian women, and especially Koreans.

In contrast with many Western cultures, where darker, tanned skin is often thought more attractive, Korean women will go to great ends to get fair skin.

"Fair skin is not only just a matter of color. I think it represents wealth or higher social status here, to a degree," said Park Jung-eun, 24, a college student.

In fact, Korean women tend to be more concerned with cosmetics than those in other countries in general - the Korean cosmetics market ranked 12th in the world last year, according to the Ministry for Health, Welfare and Family Affairs. It is not unusual for them to apply seven to eight products for their day and night care.

"I guess most Korean women, including myself, wouldn`t mind spending money to have spotless fair skin," Park added.

Foreign brands are well aware of this preference.

"Korea is one of the biggest markets for Estee Lauder`s products, including the whitening line, along with China and Japan," said an Estee Lauder spokesperson.

Estee Lauder has recently unveiled their new Cyber White EX 2009 line. The sunscreen, Extra Intensive UV Protector SPF 50/PA+++, protects skin from ultraviolet lights while getting rid of preventing spots. Extra Intensive Illuminating Mask and Spot Corrector are also intended to make the skin fairer without being excessively strong, a spokesperson said.

On the more affordable side, consumers can try local brand The Faceshop`s MyeongHan Miindo whitening line furnished with products from Spot Cream to powder foundation, Two-way Cake SPF 35/PA+++.

The products, made of fermented traditional Oriental medicine, are getting positive responses from consumers, according to a company spokesperson.

"Since the sunscreen`s effect only lasts for a limited time, it is important that consumers also retouch their make-up with a powder foundation with sunscreen," said the spokesperson.

Experts advise that along with the use of whitening products, everyday habits - such as taking vitamin C, drinking water and regularly exfoliating - are important in keeping bright and healthy skin.

New Shinsegae Busan Faces Brush With Law

In the basement of Shinsegae Group's brand new multiplex mall in Busan, shoppers can find a complete variety of grocery, household and electronics goods, plus a full range of Shinsegae E-mart's private label products, all spread out across a huge space of 6,900 square meters. But the retail giant refuses to call what looks awfully like a hypermarket a hypermarket.

That's because the company did not get the necessary clearance to open a discount retailer prior to kicking off the multiplex shopping center dubbed the Centum City store in Haeundae, a southern port city, Tuesday.

Local real estate law, citing district unit planning regulations, bans the operation of oversized discounters on the piece of property Shinsegae's new store is sitting on.

Considering Shinsegae's industry supremacy and long retail experience, the slip up may have gone overlooked, but its rival Homeplus raised the issue last week, days before the opening.

It filed a complaint with the Haeundae District Office on Feb. 25, demanding that authorities cancel Shinsegae's operation permission. However, ward officials passed on the decision-making to the Ministry of Knowledge Economy and gave the retailer "conditional approval."

"Issuing last-minute changes will lead to enormous negative economic impact in the local community," said a ward official, who explained that Shinsegae and its related businesses have so far hired up to 6,000 people in the area.

The shopping center, which rang up a daily sales record of 8.1 billion won on the opening day, is expected to help draw tourists from regional cities and neighboring countries.

Downplaying the economic benefits, Homeplus officials criticized the district authorities for evading their responsibility in properly inspecting the massive 14-story multiplex from the start. The building contains entertainment and leisure facilities including a department store, spa, ice rink, movie theater and a driving range.

"If they knew the rules and Shinsegae's plan thoroughly, they would not have granted permission," said a Homeplus spokeswoman, who explained that a discounter, by law, is a retail outlet more than 3,000 square meters in size, less than half the size of Shinsegae's basement floor.

Dodging accusations, however, the country's No. 1 retail chain presented a different understanding of the district planning law.

"The regulation outlaws independent discounters from operating, not a business that is part of a department store," said a company official, who argued that the store layout has been property adjusted so that it would fit the definition of a "department store."

For example, shoppers have to go to separate checkout counters for grocery goods and electronics, instead of using one common counter for all products as hypermarkets allow.

Ministry officials said they will decide whether or not Shinsegae's basement retail outlet is legitimate within the next 15 days.

Private English Education Cost Rises 12 Percent

Private English language education costs increased nearly 12 percent last year, leading the overall growth of private tutoring expenditure and calling into question the effectiveness of the Lee Myung-bak administration's education policy emphasizing competition and English education.

The nation's total private education costs for primary and secondary schools grew 4.3 percent from a year earlier to 20.9 trillion won ($13.7 billion) in 2008, according to a joint annual survey by the Ministry of Education, Science and Technology, and the National Statistical Office (NSO), released Friday.

This means parents spent about 233,000 won on each child per month for private education ― up 5 percent ― including a monthly average of 76,000 won per child for private English education, up 11.8 percent. The increase in private education spending came despite shrinking household income amid the deepening economic downturn. Average household income dropped 2.1 percent to 3.02 million won in the four months to December.

It is the second annual survey of some 34,000 parents at 273 elementary and secondary schools.

"Private English education costs led the overall growth. The increase reflects growing demand for English education in line with the globalization trend," said Yang Sung-kwang, director general of the ministry, during a press conference.

He also cited the government's policy to strengthen English education and the fall in the number of students going overseas to study.

According to the ministry, the number of students going overseas dropped 12 percent to 1.29 million in 2008, reflecting rises in costs due to the weaker won against the dollar.

The data also showed that expenses in private education are poles apart between affluent and poor households. By region, Seoul topped the average education cost per student with a monthly 296,000 won, which is 2.4 times more than in rural areas. Children of families earning more than seven million won a month spent 8.8 times more for private education than those of families earning less than one million.

According to the survey, most parents said that they pay for private education as companies value universities' reputation in recruitment, adding that companies should hire employees based on their abilities rather than university name value to reduce the costs.

The ministry will designate 300 ``schools free from private education'' and support each with financial aid to the tune of 200 million won, and it plans to continue strengthening English education at public schools to reduce increasing private education costs.

The government, universities and teachers' groups announced a declaration Friday that they would cooperate to normalize public education. The education ministry, the Korea Federation of Teachers' Associations (KFTA), the Korean Council for University Education (KCUE) and a group of top educators supervising elementary and secondary schools in 16 cities and provinces will lead the campaign.

This the first time that core educators' groups have made such a joint declaration. Education Minister Ahn Byong-man, KCUE President Sohn Byung-doo, KFTA President Lee Won-hee and Kong Jeong-taek, chairman of the top educators, signed the agreement calling for them to cooperate for better public education and lower private education costs.

Retailers 'Exaggerate' Quality of In-House Brands

There was a reason why the toilet paper seemed so thin, the ham didn't taste porky enough and the milk was slightly bland. It turns out that the proud and praised in-house labels of local retailers have been delivering low quality, just like their low price.

Consumers should've known already through first-hand experience, but it took the recent confessions of several manufacturers to snap cash-short shoppers out of the cheaper-is-better mode.

Maeil Dairy and Binggrae, two of the country's largest milk producers, candidly told local media earlier this month that the products they specifically make for Shinsegae E-mart, South Korea's No. 1 discount retail chain, are clearly different in quality from their own brands.

Maeil and Binggrae are the main manufacturers of E-mart's private label (PL) milk goods.

Binggrae, best-known for its popular banana-flavored milk, even said that it strategically _ but not too obviously ― differentiates the content and flavor to educate consumers that the E-mart-branded milk isn't as good as Binggrae's signature product.

"We can't put our customer loyalty on the line to cater to giant retailers," said a company official, despite the fact that the supermarket chains are manufacturers' biggest and most reliable distribution channel.

Considering that store brands cost 20 to 30 percent less than national brands, the difference should almost be expected. But consumers are thrown off because retailers like E-mart, which led the PL boom in the local market, have consistently promised that the economical private brands are "equal in everything, but just cheaper."

"Despite the recent happening, we still stand by our original principle," said E-mart spokesman Lee Nam-gon.

Hypermarket chains' formula claims that their simple manufacturer-to-store distribution chain and minimal marketing costs allow product offerings at a fraction of market prices, without sacrificing any of the ingredients.

Welcoming the friendly price, consumers bought what top retailers E-mart, Homeplus and Lotte Mart said, and the commitment delivered directly to promising sales results.

Last year, revenue from E-mart's store-brand labels accounted for 19 percent of total sales, while Homeplus and Lotte Mart saw 25 percent and 17 percent of sales generated, respectively, from their own brands.

All three retailers sell thousands of PL items, ranging from staple goods like milk and rice to soda, Kleenex and laundry detergent.

With discounters in a race to beef up their stock of store labels faster, the business was supposed to get better this year in the face of a worsening economic downturn.

But the bad news is that the latest milk incident is putting the quality of all private brands in doubt.

"Consumers have already started giving these cheap products a second thought," said Lee Jung-soo, a spokeswoman of the Korea Consumer Agency (KCA). "It's one thing to know exactly what you're paying for, but it's another thing to be fooled into buying something without knowing the real contents."

E-mart last week pulled the milk products that were questioned from its shelves to "investigate their quality," but discontent over sub-par goods is quickly spreading and more consumer products are under question.

Detergents, shampoos and even snacks were found to have been made with Chinese raw materials, or below-grade ingredients. LG House & Health Care, shampoo-maker Aekyung and snack manufacturer Kirin are among manufacturers that have hinted at the practice.

A study done by the KCA last year showed that the percentage of main ingredients in certain private-brand products was lower than that of those sold under manufacturers' own labels.

Industry insiders, however, say that companies have no choice but to churn out half-way decent goods due to price pressure from retailers.

"Retailers set a price and manufacturers have to work around it," said an industry source, adding that if they fail to do so, companies could face a temporary or permanent sales suspension at the grocery chains' nationwide outlets as punishment.

Lee of E-mart, however, fended off these claims, saying that retailers and manufacturers are in a partnership to offer consumers the best products at the best price.

Meanwhile, the Fair Trade Commission is considering launching an investigation into the relationship between retailers and manufacturers to see whether there has been unfair pressure involved.

Manila Forum Kicks Off

Curtains were raised for the Korea-Philippines Business Forum on February 18 with key Philippine government figures participating the meeting to express their strong will to broaden economic ties between Korea and the Philippines.

President Gloria Arroyo of the Philippines and her five economic ministerial officials attended the event with Environment and Natural Resources Secretary Jose Atienza and Agriculture Secretary Arthur Yap enthusiastically explaining fundamental resources in the Philippines, such as energy, resources and agriculture, during the Wednesday Welcoming Dinner held at the Manila Hotel.

Approximately 90 Philippine enterprisers also participated in the Forum to search for means to expand the exchange between Korea and the Philippines. Ayala Land Inc. (ALI) CEO Jaime Ayala, state-run National Power Corporation CEO Froilan Tampinco, Rizal Commercial Banking Corporation Chairman Alfonso Yuchengco, Ernst & Young Philippine head David Balangue, who is concurrently the Philippine Chairman for the Korea-Philippines Economic Cooperation Council, were all present.

President Arroyo presented the Philippines’ economic vision in her welcoming speech this day and hoped for increased investments from Korea. The Philippine President set the fight against poverty as her topmost policy.

Meanwhile, Chairman Miguel Varela of the Philippine Chamber of Commerce and Industry disclosed, “This is the first time for such giant-sized business forum to be held in Manila between Korean and Philippine entrepreneurs. I hope this Forum could further widen the economic partnership between Korea and the Philippines.”

Chanel’s Day of Disgrace or Power of Market?

It was unimaginable even few years ago that top French cosmetics brand Chanel could be replaced, especially by a Korean maker, but Lotte Department Store said it will be.

The nation's No. 1 department store chain said it is ``highly possible'' that either Sulwhasoo or Hera, both brands of Amore Pacific, could take over Chanel's spot at Lotte's main store in Seoul in February.

"We're first going to get the main store squared away before finalizing Chanel's replacements in our other locations," said Lotte spokesman Oh Yong-seok, hinting that the two homegrown brands will be the likely substitutes at other outlets.

Chanel said late January that it would withdraw its cosmetics counters from seven major Lotte Department Store branches in Jamsil, Nowon, Youngdeungpo, Busan, Daegu and Gwangju as of January 29.

The decision came after months of conflict over store space and location. The French brand wanted to keep its large central position, but Lotte demanded downsizing as Chanel's sales continued to fall.

Chanel cosmetics, which was the store's best-selling cosmetics brand until 2002, tumbled to the No. 5 position, as local makers came out with new functional products. Currently, Amore Pacific's Hera and Sulwhasoo are ranked No. 1, followed by Estee Lauder, Lancom and Dior.

According to Lotte, Chanel's former space ― which measured 100 square meters ― is large enough to accommodate two to three brands, so it is considering introducing new brands like Bvlgari skin care and Kevin Aucoin.

The top emporium, however, didn't rule out the possibility of mending fences with the French legend if it decides to belatedly take their original offer.

"In business, you never know what's going to happen," said Oh, adding that Lotte is willing to talk again if Chanel chooses to downsize and relocate.

But the European maker downplayed the possibility of returning.

"Brand image is our top priority," said Chanel spokeswoman Kim Eun-hyung, "so if conditions that retain our image aren't satisfied, we aren't interested."

Although Chanel is keeping a firm position, industry experts say that the foreign brand is on the losing end of the split.

The seven Chanel department store locations account for some 20 percent of Chanel's cosmetics sales in Korea, while the brand's products generated just 6 percent of Lotte Department Store's yearly cosmetics revenue last year.

"Lotte's luxury image can take a minor hit by losing Chanel, but it all comes down to money, so the latter has got more to lose," said an industry official who didn't want to be named.

Consumption Priorities Differ Among Age Groups

Walking through the streets of trendy Myeongdong without making a single purchase is a challenge and torture for Sur Jong-sun, a 28-year-old fashionista who works for a local cosmetics firm. Whether it is a pair of new boots, a new cell phone cover or even a hair band, Sur often buys on impulse.

"It's my way of relieving stress and a habit that I probably won't drop even if I have less money to spend," said the single professional, who makes about three million won ($2200) a month, of which she says a little more than 600,000 won goes toward shopping.

"It's sort of an investment," says Sur, who adds that she never fails to make ends meet despite the splurging lifestyle because of her save-and-spend balance.

"I don't hesitate saving on food and transportation," said the working woman, who considers spending money on the two as "wasteful."

Sur's perception on consumption may seem unique, but a survey shows that a majority of 20-somethings share a similar view.

The Korea Chamber of Commerce & Industry (KCCI), a business lobby group, said Wednesday that more than 60 percent of respondents in their 20s said they'll scale back food-related expenditures to fight the downturn.

The poll asked 520 people in their 20s, 30s, 40s and 50s which items would be the first they'd cross off from their expenditure list to save money.

A majority of respondents in their 30s said they would sacrifice leisure activities, while those in their 40s said they'd cut back on shopping. The poll, however, showed that 30- and 40-somethings will continue to spend generously on food and leisure.

"Different age groups have different consumption priorities," said Yoon Il-sang, a consultant at HD, a local marketing agency. "It would be in marketers' best interests to study these changing consumption patterns to understand who is spending money on what."

Almost 80 percent of all age groups said they have slashed spending across the board compared to last year, according to the KCCI report.

Online Malls to Beat Department Stores in Sales

Mouse-click checkouts are all the rage in South Korea, one of the most wired countries in the world.

In 2009, online shopping malls are likely to exceed local stores in sales, according to a recent report.

Internet shopping is expected to reach 21.2 trillion won ($16 billion) in goods this year, 1.1 trillion won more than those in department stores, the Nonghyup Economic Research Institute (NERI) said in a report on the prospects for the 2009 retail market.

The advantages of shopping online ― convenience and price competitiveness ― are poised to move ahead at full throttle amid the economic slowdown, it said.Online sales will maintain momentum with an annual growth of over 15 percent this year, as consumers opt for rational spending and try to avoid additional expenses to cope with the slump, NERI forecast.

Last year, Internet purchases grew 16.5 percent to 18.4 trillion won.Department stores are likely to post a lower sales growth of 1.5 percent this year, down 3.5 percentage points from last year, according to the report.

Growing sales in luxury goods were critical to last year's showing amid a worsening bipolarization of consumers, but even high-income households have been tightening their purse strings since the second half of 2008, casting a shadow over predictions, NERI said.

As costs rise for developing a new base of customers in the saturated market, department stores will make conservative management moves by focusing on retaining existing customers, it added. Large discount stores currently top in retail market sales here, but their growth will decline this year in the face of shrinking consumption and competition among leading brands, the report anticipated. Supermarkets and convenience stores are also expected to post an increase of 10.9 percent and 13.2 percent, respectively.The NERI report forecast the overall growth of retail markets will stand at a mediocre 2.1 percent this year, with sales amounting to 173.7 trillion won.

Online shopping malls have shown steady growth in recent years.

Their number reached around 4,500 in 2006, eight times more than in 1999, according to data from the National Statistical Office.

In last year's survey by the Korea Communications Commission, more than 60 percent of Internet users aged over 12 said they bought goods in online shopping malls over the last 12 months.

Retailer in Korea. The best selling day...it's different.

When is the best day to open a customer's wallet?

Big holidays peak? Departments sales festival? Christmas? Or Valentine's?

The answer is the difference by retail business condition.

◆ Department sales festival bring the customers to open their wallets.

Lotte Department Store makes the best selling records during a sales festival.
The best selling days are the winter sales season, from the 28th of November until 7th of December.

During a sales festival the department stores sell around 53M (USD) per day.

◆ The best selling days in outlets are the big holidays.

E-mart makes a big scream on big holidays.

The no. 1 selling day is two days before Chuseok (or the Harvest [Moon] Festival).

No. 2 is the day before New Year's Day.

E-mart says the best selling days range on the big holidays.

Monthly sales are also different by department.

September is the best selling month with Chuseok (the Harvest [Moon] Festival).

But departments in November have the sales festival.

◆ ○○ Days which are the best for convenience stores.

GS25 says the best selling day is the White Day (14th of March).

No. 2 is the 11th of November on Pepero Day.

Pepero Day is an observance in South Korea similar to Valentine's Day.

It is named after the Korean snack Pepero and held on November 11 since the date "11/11" resembles four sticks of Pepero.

Valentine's day records the no. 5 sales.

GS25 say convenience stores have strong advertisements on DAY marketing.

◆ Online-malls are sensitive on the weather.

G-market, an online mall, makes the best record on the 18th and 19th of November.

The day starts the coldness in this year.

G-market says the customers stay on the inside and orders a heating apparatus.

Offline shops have higher sales on weekends.

But on-line shops have higher sales from Monday to Wednesday.

Because the customer wants to use the products on weekends.

(FYI: When you order from online shops in Korea, they deliver within 2-3 days to cover nation wide sales.)

In the Philippines, sales peak before the start of holidays such as Christmas.

Sales also go up before the opening of classes in May.

May sales are high because of the needs of school children as well as the start of the rainy season.

Seoul Character Fair 2008

The character business that brings added value.

July, 2008. Coex in Seoul.


As I entered, I saw the PUCCA booth.

I think this is one of the biggest booths for this fair.

A bag with an attached cat's head.

These are German characters. Something stylish.

From A to Z alphabet characters. A Hong Kong company.

Kerokeroppi character. This is one of the most visited booth.

I feel a kind of fear for this kid's buying power again! Kids,

you are the most important customer to us :-)

A rice character. It says, "We love rice!"

A Domo gun.

When I see a Japanese character, I don't know where they came from.

Nexon (an Online game company)'s kart rider character. I think Nexon should better go to the character business than a game;;

Um, I feel comfortable.
I like carrots. -)

A busy day for a Pororo character.

Dogs (name:sanggeun) that show on TV go to the character business.

Sometimes I am surprised by the korean's selling mind.

Hello Sponge Bob!

The portal site of DAUM's cafe.

(The cafe is a service name for the community service in Daum.)

But this time they are actually selling coffee for that.

What if they go to coffee franchise like Starbucks or Coffee Bean?

We do not know but they might already planning for that:-)

KTX(Korean High-Speed Rail) character.

Public enterprise brings cute character like this open mind.

Character that is made with carton.

The characters from students.

If we see three circles, they remind us of Mickey Mouse.

Winnie the Pooh's age is over 80 and Hello Kitty has more than 50,000 franchise goods.

I realize the power of characters that manages thoroughness.

This business goes to the generations.

Do you know other businesses like this?